Closing & Funding: practice questions

How is the lender's title insurance charge labelled in the Loan Costs section of the Loan Estimate?

1. With the title company's name as the whole label
2. With the word "(optional)" at the end of its label
3. Only as part of a single total for all third parties
4. With the words "Title —" at the start of its label ✓

Why: 12 CFR 1026.37(f)(2)(i) and (f)(3)(i) require the introductory description "Title —" at the beginning of the label for any item that is a component of title insurance or is for conducting the closing. The parenthetical "(optional)" is used only in the Other section, for separate products such as an owner's title policy (1026.37(g)(4)(ii) and comment 37(g)(4)-1).

Source: 12 CFR 1026.37(f)(2)(i), (f)(3)(i), (g)(4)(ii)

On a purchase Closing Disclosure, what does the "Disbursement Date" show?

1. When the borrower signed the Loan Estimate to show intent to proceed
2. When the first monthly payment on the new loan falls due
3. When the cash to close is expected to be paid out ✓
4. When the rescission period will end

Why: 12 CFR 1026.38(a)(3)(iii) defines the Disbursement Date in a purchase transaction as the date the cash to close from or to the borrower, or cash from or to the seller, is expected to be paid. The Closing Date is the date of consummation (1026.38(a)(3)(ii)).

Source: 12 CFR 1026.38(a)(3)

What is the purpose of the Calculating Cash to Close table on the Closing Disclosure?

1. To show the lender's profit margin on the loan transaction
2. To show the borrower what has changed from her Loan Estimate ✓
3. To show the seller's net proceeds after paying off the lien
4. To show the monthly payment over the first five loan years

Why: 12 CFR 1026.38(i) requires a table headed "Calculating Cash to Close" with the statement "Use this table to see what has changed from your Loan Estimate", setting the Loan Estimate figures beside the final ones and answering whether each changed.

Source: 12 CFR 1026.38(i)

Which of these loans secured by the borrower's principal dwelling carries NO right of rescission?

1. A loan to buy the home, secured by that home ✓
2. A home equity loan from a different lender
3. A cash-out refinance with a new lender
4. A closed-end second mortgage for repairs

Why: 12 CFR 1026.23(f)(1) exempts "A residential mortgage transaction", which 1026.2(a)(24) defines as a loan to finance the acquisition or initial construction of the principal dwelling, secured by it. The other loans are rescindable.

Source: 12 CFR 1026.23(f)(1); 1026.2(a)(24)

Which of these details appears under Closing Information on page 1 of the Closing Disclosure?

1. The borrower's credit score and its source
2. The loan officer's commission and the lender's other compensation
3. The appraiser's name and licence number
4. The settlement agent's name and file number ✓

Why: 12 CFR 1026.38(a)(3) lists the Closing Information: date issued, closing date, disbursement date, settlement agent, the settlement agent's file number, the property and the sale price or appraised value.

Source: 12 CFR 1026.38(a)(3)